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I’ve always enjoyed helping people buy and sell land. Some REALTORS hate it. I don’t know why. Sure, some land deals are a royal pain in the buttocks, but then again so are a lot of single-family home deals. And don’t even get me started on commercial transactions!
Land in and around Phoenix is going CRAZY! Here are a few true life examples:
A couple bought 40 acres near Tonopah, AZ (50ish miles west of Phoenix) about 6 years ago for around $40,000. It’s a nice parcel, mountain views, some saguaro cactus. Flat terrain with a couple of washes through it, but the majority is buildable. They got a cold call from a realtor asking if they wanted to sell it. If I remember right, this guy offered them $200,000. Fortunately they had enough sense to look into it. I priced it for them in the $370,000 range. Listed and sold it in a couple of weeks for full price. So they made $330,000 in 6 years. Not too bad. Here’s the kicker though…. That sale closed 6 months ago. Today 40 acre parcels in that area are going for $500,000 – $600,000. Yes, that’s a $200,000 increase in six months.
Last week I got a call from a realtor in Texas. Her mother has owned a 4+ acre tract near Whittman (Northwest of Phoenix) since 1976. She had gotten a cold call from someone offering her $25,000 for it. Land in that area is selling like hotcakes for $13,000 to $16,000 – easily. I’ll do the math for you. That 4 acre parcel should be listed for $55,000 – $66,000. It could be listed for even more if they aren’t concerned about selling it in a few weeks. I don’t have this listing, yet. But at least I was able to show them that selling it for $25K would be insane.
A guy in the Air Force calls me several months ago. He hasn’t lived in the Phoenix area for about 10 years. He’s getting out of the service and wants to buy a couple of acres of land to build on in the Queen Creek area (much closer to Phoenix than either Tonopah or Whittman, in the south east valley). He’s thinking he can get 2 acres for $3,000 maybe $4,000. I tell him land in Queen Creek, if you can find it, is going in the $200,000 per acre range. He thinks I’m nuts. Maybe it is nuts, but that’s the way it is. When he was here 10 years ago, Queen Creek was WAY out of town and nothing but farm land. Now it’s in town and nothing but subdivisions.
All this begs the question, “Why is land going berserk around here?” It’s actually relatively simple. It’s all supply and demand. Obviously they aren’t making any new land. Hence, supply is low. The population of the Phoenix area is exploding, hence demand is high. It is a basic law of economics folks. Low supply + high demand = increasing prices.
The savvy investor may be asking themselves, ‘Where is the best place to buy this land?” The easy answer is “Anywhere you can afford it.” If you want specific places, understand this. Geographically (and I suppose politically) there are only a few directions that Phoenix can grow. There are mountains directly to the east and northeast. Geographically Phoenix can’t grow in those directions. There are Native American reservations to the north and south (roughly). Politically, Phoenix can’t grow in those directions. That leaves due west, to the northwest and to the southeast for the direction of Phoenix growth. To the west, look to Buckeye (already getting ridiculously expensive ala the previously mentioned Queen Creek) and further west toward Tonopah. To the northwest, look past Surprise to Whittmann (and beyond). To the south/southeast, the little towns of Eloy, Toltec, Arizona City and Casa Grande are beginning to take off. You can still get land and existing homes (and new builds) for a very reasonable price in the south/southeast areas. I think that area is going to be the next major boom area. There are rumors that huge developers are looking that way. A gigantic mall is scheduled for construction near Casa Grande. Just a year ago, no one had ever heard of Maricopa (the town, not the county) and now it’s gone bonkers in real estate appreciation. Mark my words. Barring some total economic collapse, in a couple of years, home and land values in these south/southeast cities will have appreciated remarkably.
I'm Jay Thompson, and I have a little blogging problem... Welcome to The Phoenix Real Estate Guy, or "TPREG" as I fondly refer to it.
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